diff --git a/rest_framework/versioning.py b/rest_framework/versioning.py
index e27c7b316..763a92b4c 100644
--- a/rest_framework/versioning.py
+++ b/rest_framework/versioning.py
@@ -112,16 +112,19 @@ class NamespaceVersioning(BaseVersioning):
     Host: example.com
     Accept: application/json
     """
-    invalid_version_message = _('Invalid version in URL path.')
+    invalid_version_message = _('Invalid version in URL path. Does not match any version namespace.')
 
     def determine_version(self, request, *args, **kwargs):
         resolver_match = getattr(request, 'resolver_match', None)
         if (resolver_match is None or not resolver_match.namespace):
             return self.default_version
-        version = resolver_match.namespace
-        if not self.is_allowed_version(version):
-            raise exceptions.NotFound(self.invalid_version_message)
-        return version
+
+        # Allow for possibly nested namespaces.
+        possible_versions = resolver_match.namespace.split(':')
+        for version in possible_versions:
+            if self.is_allowed_version(version):
+                return version
+        raise exceptions.NotFound(self.invalid_version_message)
 
     def reverse(self, viewname, args=None, kwargs=None, request=None, format=None, **extra):
         if request.version is not None:
diff --git a/tests/test_versioning.py b/tests/test_versioning.py
index 5b77e8263..f53eddcbd 100644
--- a/tests/test_versioning.py
+++ b/tests/test_versioning.py
@@ -296,8 +296,12 @@ class TestHyperlinkedRelatedField(URLPatternsTestCase):
 
 
 class TestNamespaceVersioningHyperlinkedRelatedFieldScheme(URLPatternsTestCase):
+    nested = [
+        url(r'^namespaced/(?P<pk>\d+)/$', dummy_pk_view, name='nested'),
+    ]
     included = [
         url(r'^namespaced/(?P<pk>\d+)/$', dummy_pk_view, name='namespaced'),
+        url(r'^nested/', include(nested, namespace='nested-namespace'))
     ]
 
     urlpatterns = [
@@ -325,6 +329,10 @@ class TestNamespaceVersioningHyperlinkedRelatedFieldScheme(URLPatternsTestCase):
         field = self._create_field('namespaced', 'v2')
         assert field.to_representation(PKOnlyObject(5)) == 'http://testserver/v2/namespaced/5/'
 
+    def test_api_url_is_properly_reversed_with_nested(self):
+        field = self._create_field('nested', 'v1:nested-namespace')
+        assert field.to_representation(PKOnlyObject(3)) == 'http://testserver/v1/nested/namespaced/3/'
+
     def test_non_api_url_is_properly_reversed_regardless_of_the_version(self):
         """
         Regression test for #2711